Consumer Products

Stanley Black & Decker 2Q net off; cost cuts set

VictoriaStilwell

Stanley Black & Decker Inc.'s
SWK, -0.22%
second-quarter earnings tumbled 22% as the tool maker's results came in lower than expected and the company unveiled additional cost-saving measures and lowered its full-year guidance.

The company is planning $50 million of merger-related cost savings--primarily a reduction of its workforce--for the second half of the year and said it will curtail takeover activity in the next 12 months to 18 months in order to focus on previous deals and recharge organic growth.

The company lowered its full year per-share earnings guidance to $5.40 to $5.65, excluding merger- and acquisition-related charges, from the previous range of $5.75 to $6. The company cited foreign exchange headwinds.

The company had been reporting stronger results, at first because of the large addition of business, and later due to improved cost savings, international expansion and higher volume.

Meanwhile, the housing market, which has been one of the weakest parts of the economy in recent years during a historic bust, has seen positive signs amid a tenuous economic recovery.

For the second quarter, the company posted a profit of $154.8 million, or 92 cents a share, down from $197.3 million, or $1.14 a share, a year before. Excluding merger and acquisition-related charges, earnings were $1.32 a share. Revenue improved 8.1% to $2.81 billion.

Gross margin narrowed to 36.3% from 37% as cost of sales increased 9.2%.

The construction and do-it-yourself segment, the tool maker's largest by revenue, reported a 8.4% improvement in profit. Earnings in the security segment were up 4.2%, while the industrial segment's earnings fell 2%.

The company unveiled a share repurchase program of up to $1.2 billion as it looks to boost shareholder value. The company will repurchase up to 20 million shares using yesterday's closing price of $59.72.

The company also raised its dividend by 20% to 49 cents a share.

Shares closed Tuesday at $59.72 and were inactive in premarket trading. The stock is off 12% so far this year.

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